Scottish independence ‘could lead to job creation’

Post-independence, Scotland could have 'tremendous economic opportunities' according to a new Scottish Government report. Picture: Ian Rutherford

Refocusing the economy to capitalise on the emerging global superpowers could mean 112,000 new jobs within two decades. Efforts to get a generation of women back into work, along with a cut in corporation tax and the revival of manufacturing industries, could create tens of thousands more over the same timescale, the document said.

First Minister Alex Salmond unveiled the blueprint for Scotland’s post-independence economy and insisted a drive to re-industrialise the country’s manufacturing base would present “tremendous opportunities”.

The launch came a day after the Institute of Fiscal Studies (IFS) think tank warned that an independent Scotland would face a choice of major spending cuts or tax hikes in order to keep its public finances under control.

But the SNP insisted getting control of the economic levers after a Yes vote next year would see the country choose a different path.

The document, the last in a series to be unveiled by the SNP ahead of next week’s white paper on independence, was branded “fantasy economics” by pro-unionists, who said it ignored the realities of an expected fall in North Sea oil and gas resources and an ageing population.

However, Mr Salmond said: “Scotland can more than afford to be a successful independent country, with a thriving economy and opportunities for everyone. We have vast natural resources and huge human talent – but those advantages have been stifled by having our economic policy run by Westminster.”

He said if Scotland became independent “next week”, it would be the eighth most prosperous country in the world for GDP and have an income £2,000 per head higher than the UK average.

“The one-size-fits-all economic policies of successive Westminster governments have failed and are continuing to fail the people of Scotland,” he said.

“We perform well at the moment, but we should be doing so much better. A simple glance at many other European countries of similar size to Scotland, some without the natural advantages Scotland has, shows that we have lagged behind their growth rates for decades.”

The Scottish Government will launch its white paper next week setting out the blueprint for the creation of an independent Scottish state, along with the SNP’s preferred policy positions.

People are due to vote on the country’s future on 18 September next year, and the report set out two alternative visions for Scotland – within the UK and as an independent nation.

“A decision to remain part of the status quo will see Scotland miss out on the increased levels of economic growth that can be achieved through targeted policy-making,” the report said.

An increase in the number of businesses in Scotland is at the heart of plans to re-industrialise the economy, with Germany’s “Mittelstand” model – smaller firms with fewer than 250 employees – held up as an example for Scotland to follow.

A revival of Scotland’s engineering heritage would be among the initiatives that would drive a boost in manufacturing, along with an expansion of the renewables and pharmaceuticals industries, as the country shifted away from its reliance on the service sector, the report suggested.

SNP ministers say the UK’s economy has been too heavily based around London and the south-east of England, and this has held Scotland back. They say an independent Scotland could focus on key sectors such as financial services, food and drink, tourism and energy. This would be a “deliberate choice” to target those areas where Scotland could outperform other countries and assist them through tax breaks, support and investment and easing red tape restrictions.

About 21,000 jobs could be created over two decades if productivity was boosted by just 1 per cent, while other changes such as improved child care and work programmes could create 30,000 jobs.

The SNP’s long-standing policy of trying to attract big firms to base their headquarters in Scotland by cutting corporation tax by three percentage points would create an additional 27,000 jobs, the report claimed.

But the biggest long-term employment boost would come from a mass expansion in exports, with emerging markets such as China and Brazil now among the top 20 destinations for Scottish goods.

These countries present the “greatest challenge and opportunities from trade”, the report said, adding that a 50 per cent increase in exports by 2017 could see an additional 112,000 jobs in the economy within 20 years.

Since devolution, Scotland’s economy has improved in key areas as a result of decisions taken at Holyrood, the Scottish Government said. “A decision to remain part of the status quo will see Scotland miss out on the increased levels of economic growth that can be achieved through targeted policy-making,” the report stated.

“This would also see Scotland fail to make the vital connections between welfare, taxation, skills and employment that could dramatically reduce inequality or to receive the benefits that better-designed public services – for example, increased childcare – can deliver for the economy. It will almost certainly result in a relative reduction in Scottish public spending over the long term.”

The IFS report on Monday had the Scottish Government on the back foot,

It warned an independent Scotland would need to cut spending or increase taxes for its finances to be sustainable in the long term. It said Scotland would face a “fiscal gap” of 1.9 per cent of national income, compared with 0.8 per cent for the UK.

Former chancellor Alistair Darling, who heads the pro-UK Better Together campaign, said the SNP paper contrasted with the IFS’s warning of a multi-billion-pound funding black hole.

He said: “What we have is a wish list but not a price list for their undetailed plans. The Nationalists have chosen to ignore reality and to offer up a type of fantasy economics.

“Instead of admitting the obvious challenges caused by the rise in the number of elderly people, the fall in the number of people of working age and the eventual decline in North Sea oil, the Nationalists have reverted to type. Their response is to deny that there are any problems and to say, yet again, that the experts are wrong.

“Their paper today seems to be telling people that the best way to respond to the warning from experts that going it alone would mean tax rises for families and service cuts to communities is to make unfunded promises of business tax cuts. It just doesn’t make any sense.”

Scottish Secretary Alistair Carmichael said the report had been an opportunity for the Scottish Government to deal with the “many difficult questions” about the economics of independence. “It has completely failed to do so,” he said.

Scottish Conservative finance spokesman Gavin Brown MSP said: “Never before in the history of reports have so many pages managed to achieve so little. This adds almost nothing to the debate and contains hardly anything that is fresh or new.”

Scottish Liberal Democrat leader Willie Rennie said: “Today they [the SNP] want tax cuts for big business. Last week they wanted big increases in welfare spending. Everyone can see it doesn’t add up.”